Certified Supply Chain Professional (CSCP) Practice Exam

What does physical inventory entail?

1. A projected number for future inventory

2. Counting actual items in stock

3. Analyzing loss and damages

4. Calculating safety stock levels

The correct answer is: Counting actual items in stock

Physical inventory involves the actual counting of items in stock at a specific point in time. This process is essential for accurate inventory management as it provides a snapshot of the available inventory, ensuring that records reflect the true quantities on hand. Conducting a physical inventory helps identify discrepancies between actual stock and recorded stock, which may arise due to theft, loss, damage, or errors in previous stock counts. This practice is vital for maintaining the integrity of inventory systems, allowing businesses to make informed decisions regarding restocking, resource allocation, and financial reporting. It also supports compliance with financial regulations and helps businesses avoid overstocking or stockouts, which can affect customer satisfaction. In contrast, the other options involve different aspects of inventory management. Projected numbers for future inventory relate to forecasting demand and planning for future stock requirements, while analyzing loss and damages pertains to assessing inventory performance and issues rather than counting stock. Calculating safety stock levels is a method used to ensure there is enough inventory available to meet unexpected demand or supply chain disruptions.